Even the US Dollar is starting to lose its shine

US Dollar experienced worst day in a month and dropped against major peers yesterday after the US retail sales missed forecast. The data contracted 0.8% vs expected -0.4%, while the prior data was a 0.9% decline. It is the first time since 2012 when retail sales recorded second consecutive decline. The negative data may be temporary as job market is recovering according to the recent job market report. However, majors took this opportunity to rebound against the Dollar.

Sterling finally broke through the long-run downward trendline and refreshed recent high to 1.5415. The strong rally showed the bearish trend of Pound Dollar has ended. As UK is expected as the second nation to raise its benchmark interest rate after US, Pound recent performed much stronger than its neighbour Euro and commodity currencies. The next target for bulls is 1.56.

Yen surged over 1.3% against Dollar as the Bank of Japan Governor Kuroda said that further stimulus could be “counterproductive”. USDJPY plummeted over 150 pips after the speech and closed at 119, whilst the pre-news level was at 120.30. Technically, Dollar Yen is still bullish as the drop has not reversed the breakout yet. We shall wait longer to see whether the depreciation of Yen will continue without strong expectation of new stimulus program by BOJ.

Aussie Dollar slid during the Asian trading hours as its unemployment rate surprisingly rose to 6.4%, the highest level since 2002. The data supported the recent rate-cut decision of RBA and increase the speculation of further cuts. AUDUSD recovered all lost later with major peers’ rally against Dollar, but the outlook is still bearish.

Back to stock markets, the Shanghai Composite rebounded 0.5% to 3173. The Nikkei Stock Average surged 1.85% on weaker Yen. Australian ASX 200 lost 0.44% to 5743. In European markets, the UK FTSE was up 0.16%, the German DAX surged 1.56% on Ukraine news and the French CAC Index gained 1%. US stocks rose broadly even after the downbeat data. The S&P 500 closed 0.96% higher at 2089. The Dow gained 0.62% to 17972, and the Nasdaq Composite Index rose 1.18% to 4858.

On the data front, Australian RBA Gov Stevens will have a speech at 9:30 am AEDST. Eurozone flash GDP will be released 21:00 pm AEDST. Canada Manufacturing Sale will be at 0:30 am AEDST at midnight.

Have a great trading day! Anthony

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